Formats of Income Statement and Balance Sheet
Income statement: In the case of sole proprietary and partnership concerns there are no prescribed forms of the income statement and balance sheet. Their preparation is also desirable but not compulsory. However, they are generally prepared. In the case of trading concern, a trading account and in the case of a manufacturing concern, a manufacturing account and a trading account can also be prepared. In such a case, the account heading is mentioned as follows: Manufacturing/trading and profit and loss account.
In the case of joint stock companies' preparation of the profit and loss account and balance sheet every year is compulsory. There is no prescribed form (except in the case of banking and insurance companies) of the income statement or profit and loss account. The account is titled as "Profit and loss account"
The results of manufacturing and trading activities may; however, be shown separately in the account.
The profit and loss account is usually prepared in a T shape. In the case of joint stock company, the manufacturing, trading and profit and loss account is prepared in the above format except with three modifications:
I. The heading given is only "Profit and loss account" for taxation in the profit and loss account;
II. The net profit is shown after making provisions for taxation in the profit and loss account;
III. Figures, for the previous period, if any, have also to be given.
Profit and loss appropriation account: In the case of joint stock companies, a profit and loss appropriation account is also prepared. It explains as to how the profit earned during the period has been distributed.
Balance sheet: There is no prescribed form of balance sheet for a sole proprietary or a partnership concern. However, the assets and liabilities may be shown in any of the following orders:
I. Liquidity order
II. Permanency Order
In case the concern adopts liquidity order, the assets which are more readily convertible into cash are taken into account
In the case of joint stock companies' preparation of the profit and loss account and balance sheet every year is compulsory. There is no prescribed form (except in the case of banking and insurance companies) of the income statement or profit and loss account. The account is titled as "Profit and loss account"
The results of manufacturing and trading activities may; however, be shown separately in the account.
The profit and loss account is usually prepared in a T shape. In the case of joint stock company, the manufacturing, trading and profit and loss account is prepared in the above format except with three modifications:
I. The heading given is only "Profit and loss account" for taxation in the profit and loss account;
II. The net profit is shown after making provisions for taxation in the profit and loss account;
III. Figures, for the previous period, if any, have also to be given.
Profit and loss appropriation account: In the case of joint stock companies, a profit and loss appropriation account is also prepared. It explains as to how the profit earned during the period has been distributed.
Balance sheet: There is no prescribed form of balance sheet for a sole proprietary or a partnership concern. However, the assets and liabilities may be shown in any of the following orders:
I. Liquidity order
II. Permanency Order
In case the concern adopts liquidity order, the assets which are more readily convertible into cash are taken into account